CHAPTER I INTRODUCTION. Since The Basic Law of Agrarian Affairs was issued in 1960, the

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1 CHAPTER I INTRODUCTION 1.1. Background Since The Basic Law of Agrarian Affairs was issued in 1960, the Indonesian government has tried to implement land reform in order to open the access to land especially for small farmers. The implementation of the redistribution has been the object of land reform in Indonesia, especially in Kersana District. It was so decreed in 1963 by the Head of National Land Agency (Decree no. 25/ X/2/88/TP/63 dated 13 July 1963). Before becoming the Indonesian government s land, all of the land in Kersana District was under the mastery of the Netherlands colonial power. By the decree, the Indonesian Government redistributed the land to the farmers who lived in Kersana District. All the households in the 13 villages of Kersana District got land in this project. However, not all the farmers registered their land. It was because the compensation fee that they would have to pay to government was so high that they could not afford it. Meanwhile within a period of 15 years, if the target group of land reformees did not register their land at the land office, the entitlement would be disqualified and the land returned back to the state. In 1997, The Head of The National Land Agency issued Decree Number 11 of 1997 on the control of land. This decree was to be one of the basic ones to redistribute agricultural lands which have not been registered by the 1963 land reform s target group. In 2008, Limbangan Village, where there were some 1

2 2 farmers who did not register their land because of their poverty, got the grant from government. The lands that they got from the 1963 land reform were redistributed again to them and registered for free. They can have land ownership without paying for any land compensation fee to government. By giving the land entitlement for free to the 2008 land reform target group, the government mainly aimed to open access to capital. These farmers are expected to use the land certificate as collateral to get the capital for improved farming. However due to the first land reform in 1963, the land that they have is too small either to be cultivated or to be collateralized to get a loan. The 1963 land reform divided the land in this area in the same size, which is 0.16 hectares per parcel. At that time each family only received one parcel of land. The relation between land reform and the potentially higher quality of life of the land reform target group is something that must be proven to verify the success of agrarian reform in Indonesia. It also needs to be questioned how the land reform program is beneficial to the recipients, especially if it improved the welfare of farmer families. This research attempts to find whether the activity of land reform is relevant to the economic improvement and welfare of the local society especially farmers who receive the benefit of land reform in Limbangan Village, Kersana District, Brebes Regency.

3 Research Questions Those conditions mentioned in the background section raise the research questions as follows: 1. Does this land reform project impact to the household economy of the poor farmers? 2. What factors may lead to change of farmers economic behavior? 3. What can the farmers do without a land certificate? 1.3. Research Objectives The research plan objectives are to answer the research questions mentioned above: 1. To study the impact of the land reform program on the economy of poor farmers 2. To identify what factors influence the decision of farmers to change or not to change their economic behavior by taking loans using the land certificate. 3. To provide information of their local socio-economic conditions as an input for policy making Hypothesis Because the government lacks awareness of local practices and situation and lacks local people s participation, land reform does not spread its benefit to all people.

4 Problems Small farmers in this research are only having a small area of land. But one house contains more than one nuclear family. If they want to improve their productivity and welfare, they have to improve their inputs to production, such as seedling, machinery, pesticide, irrigation, or chemicals, or they should have more land. The basic idea of land reform is to give poor farmers motivation to use the land not only as a production factor but also as an access to get the other production factor (capital), so they can increase their productivity. The farmers understand that the land certificate can be use to get formal credit, but many of them do not use it and only keep it at home. One of the reasons is that they already have their own system to fulfill their needs which is different than the government idea as will be described below. The other reason is that the cost of being involved in a debt cycle by using land a certificate to get a loan is greater than the expected benefit. In this study the problem occurs when there is gap between policy and reality. There are two economic systems which do not fit to each other. First is the traditional economic system which is based on reciprocity ethic, and food selfsufficiency. Second is the modern economic system that governments have been promoting by encouraging farmers to get loan and have more capital and put their land at risk in order to have more farms productivity.

5 Research Location in Brief The research location is in Limbangan Village, Kersana District, Brebes Regency, Central Java Province, Indonesia. Figure 1.1 Map of Republic of Indonesia Among 35 regencies/cities in Central Java Province the poverty rate in Brebes is on the top 3 in Central Java. Almost 25% of population in Brebes is under the poverty line. Kersana District is one of the land reform project s locations in Indonesia. In 2011, its income per capita is the lowest among 12 districts in Brebes Regency which is Rp. 1,575, (equal with 15,755). (BPS, 2012) Geographically, it is located at East Longitude and South Latitude. It is bordered by Java Sea on the North, West Java Province on the West, Tegal Regency and Tegal Municipality on the East and Banyumas Regency on the South. Its location in the north coast road of Java,

6 6 which is the busiest road in Indonesia, makes Brebes Regency become one of densely populated areas in Indonesia. Despite its role as the biggest onions producer in Indonesia, the poverty rate in Brebes Regency is 23,01%. It is still higher than national poverty rate. (BPS, 2012) More specifically, the study is focused on Limbangan Village, Kersana District, Brebes Regency. Limbangan Village is one of the 2008 land reform locations in Indonesia. During the colonial era, all the land in Limbangan Village was owned by the colonial power and it used to be sugar cane plantations. After the independence of Indonesia, the land became the Indonesian government s land. And in 1963, that formerly colonial land was redistributed to the farmers by the first land reform project. Unfortunately, the project was not perfectly implemented, since many land reform target groups were not registering their land during the period of time given by the government. It is one of the reasons why the land reform of 2008 was held in Limbangan Village.

7 Figure 1.2 Orientation Map of Kersana District Brebes Regency 7

8 Figure 1.3. Orientation Map of Limbangan Village 8